The Nordic logistics property sector appears to have defied widespread expectations of a marked slowdown in the second quarter due to COVID-19 thanks to strong underlying economic conditions, Nordic Credit Rating (NCR) said in a report published today.
The agency attributed the apparent strength in the segment to buoyant global trade and increased e-commerce, partly arising from the pandemic itself.
"These favourable conditions have increased demand for logistics services, and the logistics property segment has seen historically high rents and low vacancies despite the pandemic," said NCR analyst Daniel Johansson, who wrote the report.
The report concedes that the Nordic market remains fragmented and has only recently attracted large international investors.
However, it predicts that regional logistics property companies are likely to face lower financing costs than previously. This is because interest rates look set to remain at historically low levels, market spreads have started to normalize since the onset of the COVID-19 pandemic, and the logistics sector itself has begun to mature with several of the more established players having large portfolios of high quality properties.
"This is particularly true for operators with a balanced risk approach to projects and a disciplined attitude to increasingly expensive acquisitions," Mr Johansson said. "Increasing use of green financing is likely to moderate total interest costs," he added.
If you have any questions, please contact:
Daniel Johansson, +46 732 324 378, daniel.johansson@nordiccreditrating.com
Mille O. Fjeldstad, +47 99 03 89 16, mille.fjeldstad@nordiccreditrating.com